Competitive Strategy Michael Porter Five Points 2009-03-19232205

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					Competitive Strategy Michael Porter Five Points 2009-03-1923:22:05

REVIEW: Porter's four works he laid the business community not only the
status of Mount Rushmore, but also high-level business strategy in the development
of guiding light
Competitive Strategy Michael Porter Five Points
Michael Porter Five Forces Model


Michael Porter's book is not easy to read, but Porter's theory of
competitive strategy at first glance complex, in fact, a clear context, the main focus of
his theory are: five forces model, three general strategy, value chain, diamond,
industry cluster.
1. Five Forces Model
Profitability of the primary deciding factor is the "industry
attractiveness." Enterprises in the development of competitive strategy, we
must understand the competition rules determine industry attractiveness. Competition
law can be a concrete analysis of five competitive forces, as shown, including the five
competitive forces: threat of new entrants, the bargaining power of customers, threat
of substitute products or services, the bargaining power of suppliers, and both a
The five competitive to decide Chanye of profitability, they will affect the
product's Jia Ge, Cheng Ben with the required Touzi, Ye determine the
industrial structure. Enterprise if it is to have a long-term profitability, we must first
understand the industrial structure in which, and the shape of the pro-business
2. Three general strategies
Competitive strategy is the second central issue: the relative business position in the
industry. Competitive position will determine the profitability of enterprises is higher
or lower than the industry average. Even in the industrial poor, poor industrial average
profit level, the competitive position of enterprises better still get a high return on
Each business will have many advantages or disadvantages, the advantages or
disadvantages of any city on the relative cost advantage and the relative differential
effect. Cost advantage and differentiation are better at business than their competitors
in response to five competitive results. To the two basic competitive advantage and
business activities of the corresponding combination, you can export to allow
enterprises to obtain better competitive position of the three general strategies: overall
cost leadership, differentiation strategy and the specific strategy.
"Overall cost leadership strategy" requires the enterprises to
establish a highly efficient, large-scale production facilities, and do everything to
reduce costs, strict cost control, administrative expenses and research and
development, service, marketing, advertising, etc. costs. To achieve these goals,
companies need to cost in the management of highly importance, indeed the total cost
is lower than its competitors.
"Differentiation strategy" is to provide the product or service
differentiation, to establish the scope of some of the whole industry has a unique thing.
Differentiation strategy can be achieved in many ways, such as the design of brand
image, maintain the technology, features, customer service, business networks and
other unique, and so on. The ideal situation is in some respects has the characteristics
of differentiation. But this strategy and increase market share target is not taken into
account, in establishing the company's differentiation strategy activities are
always accompanied by high costs, and sometimes even the whole industry-wide
customers are aware of the company's unique advantages, it is not All
customers will be willing or able to pay the high price of the company required.
"Specific strategy" is the main attack a particular group of
customers, a product line or a section of a sub-regional markets. Low cost and
differentiation strategy are in the context of the whole industry to achieve its
objectives, specific strategy of the idea that: specificity of the company's
business to a higher efficiency, better results for a narrow strategy target services to
more than the broader range of competitors. Company or by meeting the needs of
specific target to achieve a differentiation, or services for this target to achieve a
low-cost, or both have both. Such companies can make profit potential than the
industry average.
Competitive advantage is the core of any strategy, enterprises should gain a
competitive edge to make a choice, to decide which areas want to advantage. Neither
the idea of a comprehensive strategy of attack characteristics, can lead to lower levels
of performance, it means companies have no competitive advantage at all.
3. Value Chain
Competitive advantage derived from the in-house product design, production,
marketing, sales, transportation, support and many other independent activities. These
enterprises have contributed to both the relative cost position, but also constitute the
basis for differentiation. Therefore, the analysis of sources of competitive advantage,
must have a systematic way to examine all the activities within the enterprise, and the
relationship between activities.
Value chain is a dominant source of the basic tools. It can be a variety of business
activities in a way to deliver value to be unbundled in order to understand the cost of
enterprise features, as well as existing and potential sources of differentiation.
Business activities are independent, and it is another link of the.
Enterprises should be based on source of competitive advantage, and through the
understanding of organizational structure and value chain, value chain, internal links,
as well as its suppliers or marketing channels and the link between the relationship
between a set of appropriate forms of coordination and, according to the value of
chain need to design the organizational structure, help to form enterprises to create
and maintain competitive advantages.
The company's value chain, and further may upstream suppliers and
downstream buyers in the value chain-linked to form an industry value chain.
4. Diamond
The success of competition in the enterprise, the state played an important role.
Therefore, Porter also extended his research to the national competitiveness. For this
topic, Porter "diamond" (also known as diamond theory)
analytical framework. He believes that may enhance their speed to create competitive
advantage include:
● factors of production: is the basic condition of a country (such as natural resources,
education, infrastructure) into the special advantages. Such as the high degree of
professional skill and application of technology. For example, the Dutch flower
industry is developed, it is not because of the tropical and has been ranked number
one in the flower industry, but because it is in flower cultivation, packaging and
transportation of the highly specialized research institutions.
● Demand: refers to the domestic market of the industry demand for services
provided or the number and maturity. For example, the Japanese family as a crowded,
so toward the Japanese home appliances are small, portable direction. It is because the
Japanese domestic market has the most discerning group of consumers, making Japan
the world's most sophisticated, highest value appliance industry.
● corporate strategy, structure and competition: This is the final impact of
competitive factors. Business organization, management, competitive mode will
depend on the location of the environment and history. If a business location to
encourage innovation, stimulate business policies and rules to the training techniques
to enhance the ability and efforts to achieve the fixed assets investment, enterprises
will be competitive. In addition, if a strong local competitors will also stimulate firms
to continuously upgrade and improve.
● performance of related industries and support industries: an industry you want to
climax, there must be a world-class suppliers, and companies from related industries
benefit from the competition, the manufacturers and suppliers can promote the
formation of an innovative industry "ethnic." For example, Italy
has led the world's gold and silver jewelry industry, because the Italian
machinery industry has occupied 60% of the global jewelry market for production
machinery, and Italy, the mechanical recovery of valuable metals is also leading the
Diamond system is a dynamic system, it will be within the mutual pull push each
factor affects the performance of other factors, the same time, government policies,
cultural factors and the factors leading charm and so will have a huge impact, if grasp
these factors, will shape the country's competitive advantage.
5. Industrial Clusters
Competitiveness of the region on the competitiveness of enterprises have a great
impact, Porter on the study of 10 industrialized countries found that industrial cluster
is a common phenomenon in the process of industrialization, in all developed
economies, can clearly see a variety of industrial clusters. Industry cluster refers to a
specific area, with competition and cooperation, and geographically concentrated,
with interactive relevance of corporate and professional suppliers, service providers,
financial institutions, related industry companies and other relevant bodies etc. groups.
Different level of industrial clusters and complexity of different depth.
Many industrial clusters also include the extension involved due to the sales channels,
customers, supporting manufacturer, specialized infrastructure providers, the
Government and other providers of professional training, information, research and
development, standards development and other institutions, and the Association and
other relevant civil society. Therefore, the cluster beyond the scope of the general
industry, the formation of multiple industries within specific geographic areas of
mutual integration of many types of organizations connected to each
other's symbionts, constitutes the regional characteristics of competitive
advantage. Cluster development has become a study of an economy, or a particular
region and an important indicator of the level of regional development.
The concept of industrial clusters to provide a thinking, analysis of national and
regional economic development and formulate policies for a new perspective. Both
economic growth and industrial clusters, enterprise, government and other agencies
roles, and even construction companies and the government, enterprises and the
relationship of other agencies, have provided a new way of thinking.
Proceeding from the overall mining industry cluster region-specific competitive
advantage. Cluster of enterprises and single industry breakthrough in the border,
focusing on a specific area, with competition and cooperation between the enterprises,
the relevant institutions, governments, civil society organizations and other interaction.
So that they can come from a region as a whole system thinking the economy, the
coordinated development of society, to examine specific areas of competitive
advantage may constitute the industrial cluster, consider the close competition and
cooperation between regions, not just to consider a number of individual industries
and small geospatial interests.
Industrial Cluster requests the Government to rethink its role. Cluster point of view
closer to the nature of competition, asking the Government to focus on the elimination
of barriers impeding productivity growth, by competition to promote efficiency and
innovation in industry clusters, thereby promoting the continuous development of the
market, regional and local economic prosperity.

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